Why crowdfunding works.

Crowdfunding involves generating revenue for one’s self, business or product development through relatively small donations from several investors (backers). Over the past years, crowdfunding has gained popularity and acceptance from entrepreneurs, philanthropists, and investors in general. Here are a few reasons as to why this means of financing is now becoming a rising trend.

Why crowdfunding works

1. Generation of capital

Access to capital for businesses has been made easier by crowdfunding. If you believe in your idea and the strength of your product, then surely there would be others who do too? You will find these likeminded people on crowdfunding website. This makes it easier to get the funding needed to make your idea a reality.

2. Putting your Idea out there

For entrepreneurs, crowdfunding is a win-win situation. They get to solicit funds while creating an awareness of their idea on numerous channels. The free PR that comes with crowdfunding is a bonus and a very good marketing strategy. You tend to get both investors and customers at the same time.

Did you know?

Kickstarter has had 319,051

completed projects—the most overall

for any platform.

3. No cost at all

Although crowdfunding requires proper planning, there is no cost in putting out your idea, neither is there any in getting the funds generated. Crowdfunding platforms take their commission which is generally around 5%, but that is only if you campaign is successful. So there is really no harm in trying.

4. Knowing the Public’s feeling

Crowdfunding helps to bring your idea to the public. A lot of times, this is the first time this idea is being shown and sold. Crowdfunding can act like an experimental phase. It allows for entrepreneurs and business to try out their product and get valuable customer feedback, what upgrades might be missing and learn more about the market.

In Summary:

Crowdfunding is a relatively risk free way of getting funds for your ideas with almost no costs. It also has some extra incentives like showing off your idea to the public and getting to know their opinion and feedback. How’s that for a marketing tool?

What do you think about crowdfunding?